It’s great to own a home, but we’ve seen some of the unintended consequences of governmental policies, i.e. cheap money (low interest rates), tax deductible mortgage interest, etc. People who shouldn’t have bought houses did, people bought more than they could afford, and lots of people bought on the notion that their house was always going to increase in value.
Now that the auto industry is suffering badly, along comes a proposal from Sen. Mikulski (D-MD) to make auto loans tax deductible.
Why would we do this? Is this really going to save the auto industry or jump start our economy? This is an artificial way to stimulate purchases. When that happens, there’s an inflated sales variable that auto dealers should factor in, but probably won’t since they’re just happy to keep their doors open. What happens when the government programs expires (ha!). Government programs NEVER expire (unless they’re Bush’s tax cuts).
Side note: I just don’t get this about liberals. If lower taxes (tax deductible auto loans) spur investment (in cars), then why don’t they concede that lower taxes might just spur something else? And why do politicians care what gets spurred anyway?
Back to Mikulski’s terrible idea: She only wants some people to get the benefit on some cars. But if the point is to spur auto purchases, why not incentivize wealthy people to buy expensive cars? There’s no good reason.
The auto industry may very well need consolidation. If too few people are buying cars, then maybe some dealers need to close. When the economy picks up, new dealerships will open.
There is no need to subsidize auto purchases.